Hydrogen Energy Briefing Paper No 2/2021 - by Lenny Roth and Tom Gotsis - Parliament of NSW
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RELATED PUBLICATIONS Uranium Mining and Nuclear Energy in New South Wales (Issues Paper 01/2019) ISSN 1325-5142 ISBN June 2021 © 2021 Except to the extent of the uses permitted under the Copyright Act 1968, no part of this document may be reproduced or transmitted in any form or by any means including information storage and retrieval systems, without the prior consent from the Manager, NSW Parliamentary Research Service, other than by Members of the New South Wales Parliament in the course of their official duties.
NSW PARLIAMENTARY RESEARCH SERVICE Lenny Roth (BCom, LLB) Acting Senior Manager, Law ........................................................ (02) 9230 2768 Daniel Montoya (BEnvSc (Hons), PhD) Senior Research Officer, Environment/Planning ......................... (02) 9230 2003 Talina Drabsch (BA, LLB (Hons)) Senior Research Officer, Law....................................................... (02) 9230 2484 Tom Gotsis (BA, LLB, Dip Ed, Grad Dip Soc Sci) Research Officer, Law .................................................................. (02) 9230 3085 Rowena Johns (BA (Hons), LLB) Research Officer, Law .................................................................. (02) 9230 2484 Eline Saleuesile (BA, GradCert PLPP) Research Officer, Social Policy .................................................. (02) 9230 3019 Should Members or their staff require further information about this publication please contact the author. Information about Research Publications can be found online. Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion.
CONTENTS Abbreviations .................................................................................................... i Summary .......................................................................................................... iii 1. Introduction .................................................................................................. 1 2. What is hydrogen and what can it be used for? ........................................ 3 2.1 What is hydrogen? .................................................................................... 3 2.2 Uses overview .......................................................................................... 5 2.3 Heating ..................................................................................................... 5 2.4 Transport .................................................................................................. 6 2.5 Electricity generation............................................................................... 13 2.6 Industrial uses......................................................................................... 16 3. How is hydrogen produced, stored and transported? ............................ 17 3.1 Production overview................................................................................ 17 3.2 Production using fossil fuels ................................................................... 19 3.3 Carbon Capture and Storage .................................................................. 20 3.4 Production using electrolysis .................................................................. 22 3.5 Production emissions .............................................................................. 24 3.6 Production costs ..................................................................................... 25 3.7 Storing hydrogen .................................................................................... 27 3.8 Transporting hydrogen ............................................................................ 29 4. What is the current state and potential of hydrogen globally? ............. 33 4.1 Interest and state of industry ................................................................... 33 4.2 Potential hydrogen demand .................................................................... 34 4.3 Barriers and policy recommendations ..................................................... 36 5. What is the potential of hydrogen in Australia? ...................................... 39 5.1 Opportunities .......................................................................................... 39 5.2 Competitive advantages ......................................................................... 39
5.3 Economic benefits .................................................................................. 41 5.4 Barriers ................................................................................................... 44 5.5 Policy recommendations ......................................................................... 44 6. How are Australian governments supporting hydrogen and what is the current state of the industry? ........................................................................ 47 6.1 National level policy ................................................................................ 47 6.2 NSW Government policy......................................................................... 49 6.3 Other State and Territory governments................................................... 50 6.4 State of industry ...................................................................................... 52 7. Conclusion .................................................................................................. 55
Abbreviations ACT – Australian Capital Territory AE – Alkaline electrolysers AEM – Anion Exchange Membrane electrolyser AEMO – Australian Energy Market Operator ARENA – Australian Renewable Energy Agency ATR – Autothermal Reforming AUD – Australian Dollar BEVs – Battery Electric Vehicles ◦C – Degrees Celsius CCS – Carbon Capture Storage CCUS – Carbon Capture Utilisation and Storage CEFC – Clean Energy Finance Corporation CH4 – Methane CMB – Compagnie Maritime Belge CO – Carbon Monoxide CO2 – Carbon Dioxide COAG – Council of Australian Governments CSIRO – Commonwealth Scientific and Industrial Research Organisation CNR – Catalytic Naphtha Reforming e - Electron EV – Electric Vehicle FCEVs – Fuel Cell Electric Vehicles FCHEA – Fuel Cell and Hydrogen Energy Association GDP – Gross Domestic Product GW – Gigawatt H – Hydrogen H2 – Hydrogen gas H2O – Water HESC – Hydrogen Energy Supply Chain IEA – International Energy Agency IRENA – International Renewable Energy Agency kg – Kilogram kgCO2 – Kilogram of Carbon Dioxide kgH2 – Kilogram of Hydrogen gas kg/m3 – Kilogram per cubic metre Km Kilometre
kWh – Kilowatt hour kWh/kg – Kilowatt hour per kilogram LCOH – Levelised Cost of Hydrogen LH2 – Liquid Hydrogen LNG – Liquefied Natural Gas MJ/L – Megajoules per Litre Mt – Megatonne MW – Megawatt MWh - Megawatt Hour NASA – National Aeronautics and Space Administration NEM – National Electricity Market NH3 – Ammonia NO – Nitric Oxide NO2 – Nitrogen Dioxide NOX – Nitrogen Oxides NSW – New South Wales O2 – Oxygen molecule PES – Planned Energy Scenario POX – Partial Oxidation PEM – Proton Exchange Membrane electrolyser Pty Ltd – Proprietary Limited PV – Photovoltaic QLD – Queensland R&D – Research and Development RAPS – Remote Areas Power Systems SA – South Australia SAP – Special Activation Precinct SDS – Sustainable Development Scenario SMR – Steam Methane Reforming TES – Transforming Energy Scenario tkmH2 – tonne-kilometre Hydrogen gas tkmNH3 – tonne-kilometre Ammonia USD – United States Dollar VIC – Victoria WA – Western Australia $/tkmH2 – dollar per tonne-kilometre Hydrogen gas $/tkm NH3 – dollar per tonne-kilometre Ammonia
SUMMARY This paper was produced to assist the Legislative Council’s Standing Committee on State Development with its current inquiry into the Development of a hydrogen industry in New South Wales. What is hydrogen and what can it be used for? Hydrogen is the most abundant element in the universe, with the simplest atomic structure of any element (a single negatively charged electron circling a single positively charged proton). The most abundant source of hydrogen on Earth is water, the compound H2O. Hydrogen can also form hydrogen gas (H2); a colourless, odourless, non-toxic, flammable gas that is present in the Earth’s atmosphere in amounts less than 1 part per million by volume. Below -252.87◦C, hydrogen gas forms Liquid Hydrogen (LH2). [2.1] Hydrogen can be used to generate two forms of energy: heat and electricity. Heat energy is generated when hydrogen undergoes combustion in the presence of oxygen. The output from the combustion of hydrogen in the presence of pure oxygen is heat energy and water. No carbon dioxide (CO 2) or other greenhouse gas is emitted. However, if hydrogen is burned in the presence of air, harmful nitrogen oxides (NOx) can be formed. Electrical energy is generated when electrochemical processes in a fuel cell strip hydrogen atoms of their electrons and the electrons flow through a circuit. The only by-products are heat energy and water. [2.1] Hydrogen can be used in the natural gas network for home heating, cooking and water heating. It could replace up to 13% of the natural gas distributed by the network without any modification of appliances, existing pipeline infrastructure and gas meters. High-temperature industrial processes that currently rely on natural gas can convert to hydrogen with minimal retrofitting of existing equipment. [2.2], [2.3] Hydrogen is used as a fuel in electric vehicles equipped with hydrogen fuel cells. In Europe, hydrogen trains are being used to decarbonise parts of rail networks that have not been electrified. Hydrogen trucks have also been purchased for commercial use. Hydrogen buses, ships and aeroplanes are in various stages of development. The use of hydrogen as a transport fuel could improve Australia’s domestic fuel security. [2.2], [2.4] Electricity generation in NSW is moving away from coal and towards renewable energy. Renewable energy can be intermittent; which can affect the security and reliability of the National Electricity Market (NEM). Similar to batteries and pumped hydro, hydrogen can provide security and reliability to the NEM. Surplus renewable energy can be used to generate hydrogen using electrolysis, which can be stored and used at times where renewable energy output is not able to meet energy demand. [2.5] Hydrogen has a range of existing industrial uses. For instance, it is used to refine petrochemicals and manufacture ammonia, glass, metals and electronics. Most hydrogen currently used by industry is produced using fossil fuels. Renewably sourced hydrogen could power industrial processes that require high
temperatures; thereby contributing, for example, to the production of “green steel” and “green aluminium”. [2.2], [2.6] How is hydrogen produced, stored and transported? Most current hydrogen production (95%) is based on thermochemical processes involving fossil fuels; such as Steam Methane Reforming (SMR) and coal gasification. Globally, the use of fossil fuels to produce hydrogen creates 830 Mt of carbon dioxide emissions annually. [3.1] Hydrogen produced from coal is referred to as “brown”. If hydrogen is produced from natural gas, it is referred to as “grey”. Hydrogen produced from natural gas with Carbon Capture and Storage (CCS) is referred to as “blue”. CCS involves capturing carbon dioxide emissions at the point of production and permanently storing them in underground reservoirs or under the sea bed. Proponents of CCS argue that it is an effective means of producing low-cost and low-emission hydrogen. Opponents of CCS argue that it is an expensive and unproven technology that fortifies the use of polluting fossil fuels. One site in the USA and one site in Canada provide CCS for hydrogen produced using SMR. [3.1]-[3.3] A small proportion of hydrogen (5%) is produced using electrolysis. Electrolysis can be powered by nuclear energy, in which case the hydrogen produced is referred to as “pink”. If the electrolysis is powered by renewable energy, the hydrogen is referred to as “green”. [3.1], [3.4] Producing hydrogen using fossil fuels emits up to 0.76 kgCO2 per kgH2; while producing hydrogen with electrolysis and renewable energy has zero emissions. [3.5] In 2018, producing hydrogen with electrolysis cost up to $7.43 per kg; while producing hydrogen with fossil fuels cost as low as $2.27 per kg. [3.6] The main ways to store hydrogen include: compressing it in tanks, pipelines or underground reservoirs; liquefying it at temperatures below -252.87◦C; and converting it into another chemical (such as ammonia). The CSIRO expects that, by 2025, compressing hydrogen in tanks will cost approximately $0.3 per kg. In contrast, liquefying hydrogen is expected to cost $1.59-$1.94/kg. Hydrogen produced with ammonia as the product is expected to cost $1.10-$1.33kg but additional costs will be incurred in converting ammonia into hydrogen at the point of use. [3.7] Hydrogen can be transported by truck, rail or ship in compressed gas or liquid forms. Hydrogen can also be transported in pipelines as a compressed gas. Pipelines are capital intensive but enable cost-effective transport over large distances. Transporting hydrogen on ships, trucks and trains using diesel engines creates emissions and pollution; whereas transporting hydrogen on ships, trains and trucks powered by hydrogen does not create emissions or pollution. [3.8] Due to the larger cargo capacity of ships, the increased density of liquids and the greater distances travelled, shipping liquefied hydrogen offers the lowest transportation cost per tonne-kilometre ($0.09/tkmH2). Shipping ammonia offers even lower costs ($0.03/tkm NH3). [3.8]
What is the current state and potential of hydrogen globally? Clean and low-carbon hydrogen is being supported by governments of most of the world’s largest economies: e.g. Japan, European Union, United States. A 2021 report estimated that globally governments have pledged more than USD 70 billion to support the hydrogen industry. It also estimated there were USD 80 billion of mature investments in hydrogen projects until 2030. The report identified 228 hydrogen projects around the world. Europe had the largest number of projects (128), followed by Asia (46), and Oceania (24). The most common applications were large-scale industrial usage (90) and transport (53). [4.1] A 2020 report by the International Energy Agency analysed technology options to examine what would need to happen for the world to reach net zero emissions by around 2070. It found that low-carbon hydrogen would be an important part of the energy mix. In this scenario, global hydrogen production grows by a factor of seven to reach 520 million tonnes in 2070. Hydrogen use expands to all sectors and reaches a share of 13% in final energy demand in 2070. Hydrogen becomes important for the decarbonisation of heavy trucks, aviation and shipping as well as for the production of chemicals and steel. [4.2] The International Renewable Energy Agency (IRENA) identified several barriers to the uptake of green hydrogen including high production costs, a lack of dedicated infrastructure, and energy losses at each stage of the value chain. IRENA recommended that a policy approach to green hydrogen should have four pillars: (1) national hydrogen strategies; (2) policy priority setting; (3) a guarantee of origin scheme; and (4) governance system and enabling policies. With respect to policy priority setting, it noted that hydrogen is just one of several possible decarbonisation alternatives that should be carefully considered. [4.3] What is the potential of hydrogen in Australia? A 2018 briefing paper by the Hydrogen Strategy Group identified three key opportunities that clean and low-carbon hydrogen offers for Australia: (1) export; (2) domestic economy; and (3) energy system resilience. In terms of hydrogen exports, Japan and South Korea are seen as key markets. A 2020 report by KPMG stated that the development of a hydrogen industry is a significant long- term opportunity for NSW. [5.1] Australia has vast physical resources that could support a large-scale hydrogen industry. [5.2] A 2019 report by Deloitte modelled the economic impacts of a clean and low- carbon hydrogen industry in Australia under three scenarios. Compared to the business as usual scenario (where global demand expands gradually), under the targeted deployment scenario, by 2050 the Australian hydrogen industry is worth $11 billion more in GDP and there are an additional 7,600 jobs. Under the Energy of the Future scenario, by 2050 GDP is projected to be around $26 billion higher; and employment is estimated to be 16,700 jobs higher. [5.3] The 2019 Deloitte report identified three key challenges for market activation: (1) the cost-effectiveness of hydrogen compared to other technologies and processes; (2) policy and technology uncertainty; and (3) regulations, standards and acceptance. [5.4] The CSIRO’s 2018 National Hydrogen Roadmap provided
a blueprint for the development of the industry. The 2020 KPMG report made three strategic recommendations to develop the industry in NSW. [5.5] How are Australian governments supporting hydrogen and what is the current state of the industry? In November 2019, the COAG Energy Council adopted Australia’s National Hydrogen Strategy. The Commonwealth Government also announced that it would reserve $370 million from existing Clean Energy Finance Corporation and Australian Renewable Energy Agency funding to back new hydrogen projects. The Government’s September 2020 Technology Investment Roadmap: First Low Emissions Technology Statement 2020 includes clean hydrogen as one of five priority low emissions technologies. In April 2021, the Government announced $276 million in funding to accelerate the development of four clean hydrogen hubs in regional Australia and implement a clean hydrogen certification scheme. [6.1] The NSW Government is currently developing a hydrogen strategy. One of the priorities of its March 2020 Net Zero Plan Stage 1: 2020–2030 is to invest in the next wave of emissions reduction innovation, and a key focus of this is low- emissions hydrogen. The Plan set a target of up to 10% hydrogen in the NSW gas network by 2030. In March 2021, the NSW Government announced a $750 million funding program to help achieve the Net Zero Plan Stage 1. There will be investments in green hydrogen initiatives across the Program’s three focus areas; and it is expected to contribute $70 million to support the establishment of hydrogen hubs in the Hunter and Illawarra. [6.2] All other States and the Northern Territory have developed a hydrogen strategy or action plan; and most States have committed significant funding to the development of a hydrogen industry. The Victorian Government has committed over $70 million in funding to the hydrogen industry, and the Queensland Government has committed over $60 million. [6.3] As at early May 2021, there were 61 clean and low-carbon hydrogen-related projects in Australia. Over 60% of hydrogen projects (37 out of 61) were in Western Australia and Queensland; five projects were in NSW. Of the 23 projects that were in operation, under construction or in advanced development, eight were in Western Australia, five in Queensland, four in Victoria, and three were in NSW. The most advanced NSW hydrogen project is the $15 million Western Sydney Green Gas Project, which is under construction. [6.4]
Hydrogen Energy 1 1. INTRODUCTION In a June 2019 report, the International Energy Agency (IEA) stated that interest in hydrogen is “enjoying unprecedented momentum around the world and could finally be set on a path to fulfil its longstanding potential as a clean energy solution”.1 It noted that there had been previous waves of interest in hydrogen but what was new this time was “both the breadth of possibilities for hydrogen use being discussed and the depth of political enthusiasm for those possibilities around the world”.2 The IEA explained that hydrogen can be used without direct emissions of air pollutants or greenhouse gases; and it can be made from a range of low-carbon energy sources: e.g. from fossil fuels with carbon capture and storage (low emissions), or renewable electricity (zero emissions).3 In November 2019, the COAG Energy Council adopted Australia’s National Hydrogen Strategy, which stated: Australia has the resources, and the experience, to take advantage of increasing global momentum for clean hydrogen and make it our next energy export. There is potential for thousands of new jobs, many in regional areas – and billions of dollars in economic growth between now and 2050. We can integrate more low- cost renewable generation, reduce dependence on imported fuels, and help reduce carbon emissions in Australia and around the world.4 In December 2020, the Legislative Council’s Standing Committee on State Development commenced an inquiry into the Development of a hydrogen industry in New South Wales, following a reference by the NSW Minister for Energy and Environment, Matt Kean. In summary, the terms of reference for the inquiry include: The size of the economic and employment opportunity created by the development of a hydrogen industry in NSW; The State's existing hydrogen capabilities; The capacity of and barriers to NSW becoming a major production, storage and export hub for hydrogen; The economics of hydrogen's use in different sectors of the economy; The infrastructure, technology, skills, and workforce capabilities needed to realise the economic opportunities of hydrogen; and The actions needed of the public and private sectors to support the development of a hydrogen industry in NSW.5 The Committee Chair asked the Parliamentary Research Service to prepare a 1 IEA, The Future of Hydrogen: Seizing today’s opportunities, June 2019, p 3. 2 Ibid, p 18-19. 3 Ibid, p 17. 4 COAG Energy Council, Australia’s National Hydrogen Strategy, November 2019, p vii. 5 The full terms of reference can be viewed on the Committee’s website.
2 NSW Parliamentary Research Service Space briefing paper on hydrogen to assist the inquiry. 6 The Research Service prepared the paper by conducting independent desktop-based research into relevant literature. The Research Service did not access submissions to the inquiry, which closed on 26 February 2021. The paper aims to provide an introduction to the topic by answering five questions: 1. What is hydrogen and what can it be used for? 2. How is hydrogen produced, stored and transported? 3. What is the current state and potential of hydrogen internationally and what are the challenges? 4. What is the current state and potential of hydrogen in Australia and NSW and what are the challenges? 5. What are Australian governments doing to support a hydrogen industry? 6 The Hon Sam Farraway MLC replaced the Hon Taylor Martin MLC as Chair of the committee on 17 February 2021. The Hon Catherine Cusack MLC replaced the Hon Sam Farraway MLC as Chair of the committee on 15 March 2021.
Hydrogen Energy 3 2. WHAT IS HYDROGEN AND WHAT CAN IT BE USED FOR? 2.1 What is hydrogen? Hydrogen is the most abundant element in the universe.7 It is also the most abundant element in our Sun, making it the major source of the solar energy that supports all life on Earth.8 Represented by the chemical symbol H, hydrogen is the first element on the Periodic Table of the Elements. It has the simplest atomic structure of all elements (a single negatively charged electron circling a single positively charged proton).9 On Earth, hydrogen typically does not exist in its elemental form. The density of a hydrogen atom is so low it cannot be held by the Earth’s gravity, and it floats into space.10 Instead, hydrogen is typically found on Earth in the form of compounds and molecules.11 The most abundant source of hydrogen on Earth is water, the compound H20.12 Hydrogen is also present in the complex carbon compounds found in all living matter and in fossil fuels.13 Hydrogen can also form the molecule hydrogen gas (H2); a colourless, odourless, non-toxic, flammable gas that is present in the Earth’s atmosphere in amounts less than 1 part per million.14 Hydrogen can become the gas H2 at temperatures above its boiling point of -252.87◦C.15 Below its boiling point of-252.87◦C and above its melting point of -259.16◦C, it becomes Liquid Hydrogen (LH2).16 Hydrogen can be used to generate two forms of energy: heat and electricity.17 The only input required to generate heat or electrical energy from hydrogen is oxygen, and the only output produced is water (as a vapour or as condensation): From an energy perspective, hydrogen has two outstanding properties. First, it is an excellent carrier of energy, with each kilogram of hydrogen containing about 2.4 times as much energy as natural gas. This energy can be released as heat through combustion, or as electricity using a fuel cell. In both cases the only other input needed is oxygen, and the only by-product is water. The chemical reaction is: 2H2 + O2 2H2O + energy. Second, hydrogen is a carbon-free energy carrier, with reactions such as that shown above producing no CO2 or any other greenhouse gas.18 7 Royal Society of Chemistry, Hydrogen, 2021, [website-accessed 10 February 2021]. 8 By number of atoms, the Sun is made of 91.0% hydrogen. By mass, the Sun is about 70.6% hydrogen: NASA, Our Sun [website-accessed 12 February 2021]. 9 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 5. 10 What is Hydrogen? Hydroville [website-accessed 16 February 2021]. 11 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 5. 12 Royal Society of Chemistry, Hydrogen, 2021, [website-accessed 10 February 2021]. 13 William LJ, Hydrogen, Britannica and Coal, Geoscience Australia, [websites-accessed 11 February 2021]. 14 Royal Society of Chemistry, Hydrogen, 2021, [website-accessed 10 February 2021]. 15 At atmospheric pressure. Ibid. 16 At atmospheric pressure. Ibid. 17 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 5. 18 Ibid, p 5 (footnotes omitted).
4 NSW Parliamentary Research Service Space Heat energy is generated when hydrogen undergoes combustion in the presence of oxygen. Combustion is an exothermic process that produces heat irrespective of the fuel being burned.19 Unlike the combustion of fossil fuels, which produces heat energy and carbon dioxide, the output from the combustion of hydrogen in the presence of pure oxygen is heat energy and water. No carbon dioxide (CO 2) or other greenhouse gas is emitted. However, if hydrogen is burned in the presence of air, which is composed of 78% nitrogen,20 nitrogen oxides (NOx) can be formed.21 Nitrogen oxides, which include nitric oxide (NO) and nitrogen dioxide (NO2), are harmful to human health and the environment.22 Electrical energy is generated when electrochemical processes in a fuel cell strip hydrogen atoms of their electrons and the electrons flow through a circuit (Figure 1). The fuel cell is essentially an “electrochemical conversion device” that uses hydrogen and oxygen to generate electricity, heat and water.23 Figure 1: How electricity is created from hydrogen in a fuel cell24 19 Schmidt-Rohr K, Why Combustions Are Always Exothermic, Yielding About 418 kj per Mole of O2, Journal of Chemical Education, 1 September 2015, p 2094-2099. For a discussion of hydrogen internal combustion engines for motor vehicles, see: Hosseini SE and Butler B, An overview of development and challenges in hydrogen powered vehicles, International Journal of Green Energy, Volume 17(1), 2020, p 13-17. 20 Helmenstine AM, The Chemical Composition of Air, ThoughCo, 7 July 2019. 21 Burning hydrogen for heating, ICAX [website- accessed 16 February 2021]. Menzies M, Hydrogen: The Burning Question, The Chemical Engineer, 23 September 2019. 22 Nitrogen oxides, Queensland Government, 27 September 2016. 23 FCHEA, Fuel Cell & Hydrogen Energy Association, Fuel Cell Basics [website-accessed 12 February 2021]. 24 Ibid. See also: See also: US Department of Energy, Office of Energy Efficiency and Renewable Energy, Fuel Cells [website accessed – 12 February 2021]
Hydrogen Energy 5 2.2 Uses overview Hydrogen has a range of existing industrial uses. For instance, it is used to refine petrochemicals and manufacture ammonia, glass, metals and electronics.25 It is also used as a fuel in electric vehicles equipped with hydrogen fuel cells26 and has even been used as rocket fuel for space ships.27 Hydrogen can be used in the domestic economy for heating, electricity generation and energy storage. It can also be used as a fuel for trucks, trains and shipping; and its suitability for use as an aviation fuel is under active investigation. Hydrogen can also power industrial processes that require high temperatures, such as steel and aluminium production. The ability to transport hydrogen overseas in liquid or compressed gas forms provides the opportunity to develop a new export industry that will enable other nations to benefit from hydrogen’s potential uses. As discussed at 3.1, most hydrogen currently used by industry is produced using fossil fuels; although it is possible to use hydrogen in industrial processes that is produced using nuclear energy or renewable energy. 2.3 Heating In Australia, energy for heating comes from either the direct combustion of fossil fuels, particularly natural gas, or from the generation of electricity.28 It has been proposed that hydrogen can replace the use of natural gas for low temperature heating applications, such as home heating, cooking and water heating. 29 This can occur on a partial basis (up to 13%) without any modification of appliances, existing pipeline infrastructure and gas meters.30 Beyond a 13% replacement, modification of natural gas appliances and pipeline infrastructure will be required.31 Gas meters would not need to be changed for small injections of hydrogen but would need to be changed for the use of 100% hydrogen.32 High-temperature industrial processes that currently rely on natural gas can convert to hydrogen with minimal retrofitting of existing equipment.33 As discussed below (2.6), such industrial uses include the production of alumina and steel.34 25 COAG Energy Council, Australia’s National Hydrogen Strategy, 2019, p 5 26 Nicholson T, Everything you need to know about hydrogen cars, RoyalAuto, 6 October 2020. 27 Huang Z, Hydrogen fuels rockets, but what about power for daily life? We’re getting closer, The Conversation, 11 March 2019. See also: NASA, Space Applications of Hydrogen and Fuel Cells, [website-accessed 11 March 2021] 28 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 28. 29 Ibid, p 29. Indeed, from the early 19th Century, Australia relied on burning “town gas” for heat. Town gas is a mixture of carbon monoxide and hydrogen obtained from coal. It was replaced with natural gas in the 1960s, after large reserves of domestic natural gas were discovered. 30 Ibid, p 29. 31 Ibid, p 29 (footnotes omitted). 32 Ibid, p 29 (footnotes omitted). 33 Ibid, p 29 (footnotes omitted). 34 See, for instance: Wood T, Green steel is no longer a fantasy, Grattan Institute, 11 May 2020.
6 NSW Parliamentary Research Service Space Whether existing pipelines that transport natural gas from production to storage facilities can carry Hydrogen depends on such factors as: the condition of the pipe and its welds; the grade of steel used; the type of steel used; the operating pressure for which the pipeline was designed; and the proximity of storage facilities to sites of Hydrogen production.35 Much of the cast iron or steel pipeline infrastructure that transports natural gas from storage facilities to end users has already been replaced with polyethylene or nylon pipes, making it compatible with 100% hydrogen distribution.36 Upgraded infrastructure should be designed to manage the heightened safety risks posed by hydrogen, compared to natural gas. In particular, the higher pressures under which compressed hydrogen gas is stored increases the risk of explosion; while the smaller size of H2 molecules increases the potential for leakages.37 Additionally, the pale blue hydrogen flame is nearly invisible in daylight and has relatively low radiant heat.38 2.4 Transport Hydrogen can be used in many facets of transportation; from light passenger vehicles, buses, trucks, trains, ships, aircraft and even spacecraft. 39 In most cases, hydrogen is used to produce electricity in fuel cells that power electric motors. Trials are also being conducted as to whether hydrogen can be combusted instead of fossil fuels in internal combustion engines.40 Hydrogen can also be used to improve Australia’s fuel security. Hydrogen powered passenger vehicles Battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs) both use electricity stored in batteries to power their electric motors. FCEVs charge their batteries from the electricity generated when hydrogen passes through a fuel cell.41 The hydrogen is typically stored in a fuel tank as highly compressed gas (H2).42 BEVs do not use hydrogen. Instead, they charge their batteries directly from the electricity network. 35 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 30. 36 Ibid, p 30. 37 Burning hydrogen for heating, ICAX, [website-accessed 16 February 2021]. 38 Hydrogen flames, Hydrogen Tools, [website-accessed 16 February 2021]. See also: Burning hydrogen for heating, ICAX, [website-accessed 16 February 2021]. 39 NASA, Liquid Hydrogen – the Fuel of Choice for Space Exploration, 29 July 2010 [website accessed 13 February 2021]. For a detailed economic analysis of the use of hydrogen in the transport sector, see: Advisian, Australian hydrogen market study, May 2021, p 45 ff. 40 Airbus, Hydrogen combustion, explained: How hydrogen’s unique properties are ideal for engine combustion, 26 November 2020. 41 For a discussion of Battery, Plug-in Hybrid and Hydrogen Electric Vehicles, see: Gotsis T, Electric vehicles in NSW, NSW Parliamentary Research Service, May 2018. 42 Roberts D, This company may have solved one of the hardest problems in clean energy, Vox, 16 February 2018.
Hydrogen Energy 7 BEVs produce zero tail pipe emissions and zero indirect tailpipe emissions if charged with renewably generated electricity. FCEVs produce zero direct tailpipe emissions and zero indirect tailpipe emissions if they are fuelled with hydrogen that was produced from renewable energy.43 The operation of a FCEV is illustrated in Figure 2. Figure 2: The operation of a FCEV (the Toyota Mirai)44 To ensure safety, the fuel tanks that contain the compressed hydrogen gas are made of high-strength substances, such as carbon fibre, and are designed to prevent leakage in the event of an accident.45 The passenger cabin is also isolated from the fuel tank and, in the event of any leakage, the tanks are designed to harmlessly vent the hydrogen gas into the atmosphere; while sensors shut down the fuel system and the vehicle.46 Being the lightest of all atoms, hydrogen disperses quickly into the atmosphere; rather than accumulating dangerously at ground level, like petrol.47 In the event of an abnormal temperature increase caused by fire, pressure relief valves gradually release the hydrogen in order to prevent an explosion.48 43 Gotsis T, Electric vehicles in NSW, NSW Parliamentary Research Service, May 2018, p 2, 3-4, 7 and 8. 44 Toyota, Outline of the Mirai [website-accessed 13 February 2021]. The vehicle depicted in the Toyota Mirai 45 Williams B, How safe are hydrogen vehicles in a crash? Hydrogen Fuel News, 1 May 2020. See also: Toyota, Hydrogen? Is that safe? 5 August 2015 [website-accessed 15 February 2021]; and Toyota, New Mirai: Press Information 2020 [website-accessed 15 February 2021]. 46 Toyota, Hydrogen? Is that safe? 5 August 2015 [website-accessed 15 February 2021]. See also: Toyota, New Mirai: Press Information 2020 [website-accessed 15 February 2021]. 47 Ibid. 48 Ibid.
8 NSW Parliamentary Research Service Space Presently, there is only one permanent hydrogen refuelling station in Australia, located in Sydney at Hyundai’s Macquarie Park Showroom.49 The ACT and Queensland Governments are in the process of developing hydrogen refuelling stations that will fuel new government fleet hydrogen vehicles (20 in the ACT and five in Queensland).50 A hydrogen refuelling station is also planned for Victoria51 and West Australia.52 Hydrogen trucks FCEVs have relatively long driving ranges and fast refuelling times, which makes them “particularly well-suited”53 to low emission, long-distance heavy transport, where the size and weight of the battery required by a BEV truck becomes “impractical”.54 These relative differences in driving range and refuelling times are illustrated in the following comparison of FCEV, BEV and petrol passenger vehicles: Hyundai’s Nexo can drive for 666 kilometres before needing to be refuelled, while the Toyota Mirai’s range is 550 kilometres. Typically, petrol cars have a driving range of 400 to 600 kilometres on a tank of fuel. The driving range of battery electric vehicles varies depending on the battery size. The Nissan Leaf, for example, can travel 270 kilometres on a full charge while the Tesla Model S Long Range can reach 610 kilometres. Recharging an EV battery takes anywhere between 30 minutes or 12 hours depending on the speed of the charging point and battery size. Refuelling a hydrogen-powered passenger car takes just three to five minutes at a refuelling station.55 Switzerland has already purchased ten of the world’s first hydrogen trucks, known as the “XCIENT Fuel Cell”. Manufacturer Hyundai has committed to building 1,600 of the hydrogen trucks by 2025.56 The NSW Government has approved $500,000 in funding for Coregas, an Australian industrial gases company, to acquire two hydrogen trucks and build a hydrogen refuelling facility at its Port Kembla plant.57 49 Hydrogen Vehicle Refuelling Deal Could Be Green Light for Australian Fuel Cell Electric Vehicles, Jemena, 10 August 2020. [website-accessed 15 February 2021]. 50 Mazengard M, ACT Government’s 20-vehicle hydrogen fleet grounded due to Covid difficulties, The Driven, 6 August 2020. Caldwell F, Hydrogen cars to be added to government’s fleet in net step to phasing out petrol, Brisbane Times, 27 August 2019. 51 Australian Renewable Energy Agency (ARENA), Melbourne’s first hydrogen refuelling station takes shape, ARENAWIRE, 2 November 2020. See also: Dowling J, Hyundai Nexo: first hydrogen car certified for Australia, now for the refuelling stations, Car Advice, 27 August 2020. 52 Western Australia Government, $22 million investment to accelerate renewable hydrogen future, 17 August 2020. 53 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 31. 54 Ibid, p 31. 55 Nicholson T, Everything you need to know about hydrogen cars, Royal Auto, 6 October 2020. See also: Graham R, Hydrogen fuell cell vs electric cars, Euronews, 14 February 2002; and Gotsis T, Electric vehicles in NSW, NSW Parliamentary Research Service, May 2018, p 9. 56 Hyundai, World’s first fuel cell heavy-duty truck, XCIENT Fuel Cell, heads to Europe for commercial use, 6 July 2020 [website-accessed 15 February 2021]. 57 Fernandez T, Australia’s first hydrogen trucks to come to Port Kembla after landmark project gets green light, ABC News, 19 March 2021.
Hydrogen Energy 9 Figure 3: Hyundai’s XCIENT Fuel Cell Hydrogen truck58 Hydrogen buses FCEVs have effectively performed the role of public buses in overseas demonstrations: There have been a number of hydrogen bus fleet demonstrations … that show FCEVs can meet the performance requirements of public transport. There is strong competition, however, from BEV buses being made in rapidly increasing numbers …59 Foton Mobility Pty Ltd is a new company that, commencing in 2021, will introduce hydrogen buses into the Australian market.60 Its Chief Executive Officer, Neil Wang, argues that the long driving ranges and fast refuelling times of hydrogen vehicles makes them well-suited for use as public transportation: A few key benefits are that Hydrogen buses only need 12-15 mins to refuel which is in line with current diesel fuelling time and just one hydrogen fuel station deployed onsite can refuel around 160 buses. Compared to battery electric, recharging 160 electric city buses would need installation of 160 charging stations. Importantly, we can make hydrogen in regional areas which will promote jobs and stimulate local economies.61 Foton Mobility Pty Ltd plans to manufacture its hydrogen buses in Moss Vale, NSW, by the second quarter of 2022.62 58 Hyundai, World’s first fuel cell heavy-duty truck, XCIENT Fuel Cell, heads to Europe for commercial use, 6 July 2020 [website-accessed 15 February 2021]. 59 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 32. 60 Cotter F, Foton Bus Australia Powers with Truegreen, Australian Bus & Coach, 15 January 2021. 61 Matich B, Hydrogen buses are on their way to Australia, PV magazine, 19 January 2021. 62 Ibid.
10 NSW Parliamentary Research Service Space Figure 4: A Hydrogen bus63 Hydrogen trains Only approximately 10% of Australia’s rail network is currently electrified.64 Hydrogen trains could be a cost effective means by which to decarbonise the remaining rail network.65 The world’s first hydrogen train to be powered by a hydrogen fuel cell, the Coradia iLint, has completed more than 180,000 kilometres of testing in Germany and will be in regular passenger service from 2022.66 The Coradia iLint has been designed specifically for use on non- electrified lines, enabling an emission-free alternative to diesel train operations.67 The Coradia iLint has also been successfully tested in the Netherlands, which has “approximatively 1,000 kilometres of non-electrified line on which around 100 diesel trains currently operate daily.”68 Figure 5: The Coradia iLint hydrogen train69 63 Ibid. 64 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 33. 65 Ibid, p 33. 66 Alstom, World’s first hydrogen train Coradia iLint honoured, press release, 22 January 2021. 67 Ibid. 68 Alstom, Alstom’s hydrogen train Coradia iLint completes successful tests in the Netherland, press release, 6 March 2020. 69 Ibid.
Hydrogen Energy 11 Hydrogen ships In 2018, the International Maritime Organisation decided that emissions from global shipping “should peak as soon as possible and then fall by at least 50% by 2050 compared with 2008 levels”.70 In an effort to reduce carbon emissions, some shipping companies are attempting to develop hydrogen powered ships.71 Different technologies are being investigated. Battery powered ships are technically possible but practical limits arise for powering large ships over vast distances, as they “would simply need too many batteries to run on these alone”.72 The use of hydrogen in internal combustion diesel engines in ships is being explored and currently used by the Hydroville.73 This use of hydrogen generates power without carbon dioxide emissions, or the particulate matter and sulphur dioxides associated with the burning of conventional shipping fuels.74 However, the combustion of hydrogen in the presence of air, rather than in the presence of pure oxygen, can produce pollution in the form of nitrogen oxides.75 The Norwegian shipping firm Wilhelmsen plans to develop a prototype ship that is powered by liquid hydrogen (LH2).76 The prototype will convert the LH2 into electricity using a 3MW hydrogen fuel cell and this energy source will be supported by a 1MWh battery pack charged by renewable electricity from the Norwegian grid.77 The only emission that would be produced is water. One challenge that LH2 poses for long-distance shipping is the need to store it at -252.87◦C or below.78 Another challenge is the need to provide additional storage, as LH2 takes up around eight times more space to store than the amount of marine gas oil needed to give the same amount of energy.79 Installing enough hydrogen fuel cells to power a ship is also expensive.80 It remains to be seen whether these ships can operate profitably in the current market. The Australian firm Global Energy Ventures is developing the world’s first compressed hydrogen fuel cell ship (Figure 6).81 The ship is designed to use compressed hydrogen gas (H2) in its fuel cells and transport compressed hydrogen gas to the Asian market.82 70 Turner J, HySHIP: Inside Europe’s flagship hydrogen ship demonstrator project, Ship Technology, 22 December 2020. 71 Timperley J, The Fuel that could transform shipping, BBC, 30 November 2020. 72 Ibid. 73 Hydroville, CMB, [website- accessed 16 February 2021]. 74 Ibid. 75 Timperley J, The Fuel that could transform shipping, BBC, 30 November 2020. 76 Turner J, HySHIP: Inside Europe’s flagship hydrogen ship demonstrator project, Ship Technology, 22 December 2020. 77 Ibid. See also: Radowitz B, World’s first liquid hydrogen fuel cell cruise ship planned for Norway’s fjords, Recharge, 3 February 2020. 78 Timperley J, The Fuel that could transform shipping, BBC, 30 November 2020. 79 Ibid. 80 Ibid. 81 Ovcina J, Design unveiled for world’s 1st compressed hydrogen ship, Offshore Energy, 14 October 2020. 82 Global Energy Ventures Signs MOU with Pacific Hydro for Export of Green Hydrogen, Fuel Cell
12 NSW Parliamentary Research Service Space Figure 6: Artist rendering of Global Energy Ventures compressed H2 ship83 Hydrogen aeroplanes The first aeroplane to fly on electricity generated from hydrogen fuel cells was built by Boeing in 2008.84 It was a single-person plane that used power from lithium ion batteries to supplement its hydrogen power during take-off and landing. However, considerable challenges remain for hydrogen aviation; particularly in relation to commercial viability and ensuring hydrogen aeroplane safety standards matches those of existing conventional aeroplanes.85 The weight required for fuel storage is one of the most significant challenges to hydrogen-powered aviation.86 In the case of liquid hydrogen (LH2), the storage tanks must be light-weight and able to keep the fuel at a temperature below -252.87◦C.87 In the case of compressed gas, the fuel tanks must be light-weight but be able to withstand high pressures (250-350 bar).88 Industry stakeholders suggest that, if they ultimately prove to be viable, hydrogen aeroplanes will remain in development at least until 2030.89 Transport fuel security Due to a 23% decline in Australia’s crude oil production in the decade to 2016, Australia became reliant on imports for 91% of oil used for transport.90 In response to concerns that the reliance on imports and low fuel reserves were compromising Australia’s fuel security, the Australian Government recently introduced a suite of reforms91 and entered into a fuel security deal with the United States.92 Under the deal, the Australian Government has purchased a Works, 21 January 2021. See also: MOU signed with Pacific Hydro for Export of Green Hydrogen, Global Energy Ventures, ASX Announcement, 20 January 2021. 83 Ovcina J, Ballard, GEV join forces on developing fuel-cell powered ship, Offshore Energy, 4 February 2021 and Offshore Energy, CNW Group/Ballard Power Systems Inc. 84 Kramer D, Hydrogen-powered aircraft may be getting a lift, Physics Today, 2020, 73(12) p 27. 85 Ibid. 86 Ibid. 87 Kramer D, Hydrogen-powered aircraft may be getting a lift, Physics Today, 2020, 73(12) p 27. 88 Ibid. 89 Ibid. 90 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 39. 91 Australian Government, Australia’s fuel security package, [website-accessed 2 March 2021]. 92 Taylor A, Australia to boost fuel security and establish national oil reserve, media release, 22 April 2020.
Hydrogen Energy 13 portion of the United States’ Strategic Petroleum Reserve.93 The United States Government will store the Australian Government owned crude oil in its Strategic Petroleum Reserve.94 The Hydrogen Strategy Group has advised that hydrogen fuel cell vehicles “could play an important role in diversifying fuel types and reducing our reliance on imported liquid fuels for transport.”95 2.5 Electricity generation Figure 7 illustrates the shift towards renewable electricity generation occurring in NSW.96 Committed solar (473 MW), wind (609 MW) and water (2,040 MW) renewable energy projects will add 3,122 MW of generation capacity; while proposed solar (6,159 MW), wind (5,086 MW) and water (1,700 MW) will add 12,945 MW. Together, committed and proposed solar, wind and water renewable energy projects will add 16,067 MW of electricity generation capacity in NSW; more than the combined 10,554 MW currently provided by coal (8,255 MW) and the three types of gas generation (2,299 MW).97 This shift towards renewable energy is also occurring across the National Electricity Market (NEM).98 Figure 7: Electricity generation capacity (MW) in NSW, January 202199 * Excludes rooftop solar. CCGT: Combined-cycle gas turbine. OCGT: Open-cycle gas turbine. Source: AEMO 93 Ibid. 94 Ibid. 95 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 39. 96 See also: Foley M and Toscano N, Coal plant closures loom large as NSW backs hydrogen for the Hunter, Sydney Morning Herald, 12 March 2021. 97 AEMO, NEM Generation Information as at 29 January 2021 and excel spreadsheet [website- accessed 17 February 2021]. 98 Ibid. For the latest announcement of a coal power plant closure, see: Whittaker J, Energy Australia to close Yallourn power station early and build 350 megawatt battery, ABC News, 10 March 2021. 99 AEMO, NEM Generation Information as at 29 January 2021 and excel spreadsheet [website- accessed 17 February 2021].
14 NSW Parliamentary Research Service Space In NSW, the shift towards renewable energy is occurring in the context of all five operating coal-fired power stations being scheduled for retirement between 2022 and 2043 (based on an assumed 50-year technical life); beginning with the Liddell Power Station in April 2023, followed by Vales Point B in 2029, Eraring in 2031, Bayswater in 2035 and Mount Piper in 2043.100 Being dependent on prevailing weather conditions, the generation of solar and wind energy can be intermittent; producing too much electricity when it is not needed and too little when it is needed.101 This variability can affect the security and reliability of the NEM. Security is achieved when the NEM operates within set technical parameters; whereas reliability is achieved when the NEM can meet electricity demand with a high degree of confidence.102 Hydrogen can promote NEM reliability and security because it is a “flexible load” and provides dispatchable generation (Figure 8).103 Hydrogen can act as a flexible load because electrolysers can increase hydrogen production when renewable energy output rises (and electricity costs falls). The hydrogen can be used immediately or stored for later use. As discussed below at 3.3, electrolysers produce hydrogen through the chemical process of electrolysis. Electrolysis involves using electricity to split water into hydrogen gas and oxygen gas. 104 Electrolysers can be powered by renewable energy generators, nuclear energy or fossil fuels.105 The dispatchability of a generator refers to whether it is reliable and responsive in meeting a load target.106 For that reason, dispatchable generation can be contrasted with the intermittent nature of renewable energy generation.107 Stored hydrogen can be used for dispatchable electricity generation in times of low renewable energy supply or high electricity demand. The generation of electricity from hydrogen can occur either in a fuel cell or from hydrogen combustion powering a gas turbine.108 The gas turbine option requires further development and, unlike the fuel cell option, generates nitrogen oxide pollution due to the burning of oxygen at high temperatures: 100 NSW Government, NSW Electricity Strategy, p 14. 101 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 36. 102 Gotsis T, Angus C, Montoya D, Roth L, Johns R, Dobson M, Uranium Mining and Nuclear Energy in New South Wales, NSW Parliamentary Research Service, September 2019, p 16. 103 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 36. See also: Advisian, Australian hydrogen market study, May 2021, p 71 ff. 104 US Department of Energy, Office of Energy Efficiency and Renewable Energy, Hydrogen Production: Electrolysis [website-accessed 17 February 2021]. See also: Shell Hydrogen study: Energy of the Future? Sustainable Mobility through Fuel Cells and H 2, Shell, 2017, p 14. 105 US Department of Energy, Office of Energy Efficiency and Renewable Energy, Hydrogen Production: Electrolysis [website-accessed 17 February 2021]. 106 Gotsis T, Angus C, Montoya D, Roth L, Johns R, Dobson M, Uranium Mining and Nuclear Energy in New South Wales, NSW Parliamentary Research Service, September 2019, p 19. 107 See, for instance, Ibid, p 27. 108 Hydrogen Strategy Group, Hydrogen for Australia’s future: A briefing paper for the COAG Energy Council, August 2018, p 36.
Hydrogen Energy 15 Although gas mixtures with a high proportion of hydrogen have been demonstrated, the high operating temperatures required for high efficiency lead to unwanted nitrogen oxide emissions. If the challenges can be overcome, hydrogen (or ammonia) turbines have excellent potential for large-scale systems (>100 MW). There is the potential to repurpose existing gas turbines, which would reduce capital costs.109 Figure 8: Flexible load and dispatchable generation functions of hydrogen110 Electricity generated from renewable sources can also be stored; in batteries and in pumped hydro systems (after renewable energy has been used to pump the water up an incline for later release). As is the case with stored hydrogen, the electricity stored in batteries and pumped hydro can be used to promote the security and reliability of the NEM. However, stored hydrogen, batteries and pumped hydro have different costs and characteristics that determine their suitability in particular circumstances.111 Hydrogen and pumped hydro are viable at larger sizes and better suited to applications requiring longer-term storage; energy generation at peak output that lasts for days (in the case of pumped hydro) or weeks (in the case of hydrogen). In comparison, batteries are viable at smaller sizes and are better suited to short- term storage (energy generation at peak output that lasts for hours) that is highly utilised or requires a fast response.112 A residential hydrogen Energy Storage system, costing $34,750, has been developed by an Australian-led venture involving researchers from the University of New South Wales.113 The Lavo Green Energy Storage System uses excess 109 Ibid, p 37 (footnotes omitted). 110 Ibid, p 36. 111 Ibid, p 37. 112 Ibid, Table 2, p 38. 113 Blain L, World-first home hydrogen battery stores 3x the energy of a Powerwall 2, New Atlas,
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